BEIJING (AFP) -- China's central bank announced Tuesday it would raise interest rates for the fourth time this year in an effort to curb inflation that last month climbed to its highest level in over a decade.

The benchmark lending rate rises by 0.18 percentage points and the benchmark deposit rate goes up by 0.27 percentage points today, the People's Bank of China said in a statement on its website.
China's main bank lending rate will now be 7.02 percent, while the deposit rate jumps to 3.60 percent.
The decision was made ""in order to reasonably adjust money and loan supply as well as stabilize inflation expectations,"" the statement said.
Economists had predicted that authorities would act quickly after data was released last week showing that China's economy was continuing to race ahead at a worryingly fast pace.
The biggest concern for the government was inflation hitting 5.6 percent in July from a year earlier, the highest rate in more than a decade.
""The rate hike is within our expectations,"" said Qing Wang, China economist at Morgan Stanley.
""The main purpose is to amend inflationary expectations -- it should not be viewed as authorized monetary tightening, but instead, it should be viewed as a passive reaction to inflation.""
Wang said he was expecting one more interest rate raise in the short term.
""To manage inflationary expectations, you need to maintain a tightening bias,"" he said.
Even before the official inflation data was announced last week, government officials were already voicing their worries of an overheating economy.
""Various economic indicators are on the rise, and they may enter into the alarm zone,"" Zhang Tao, vice director of the central bank's international department, was quoted by a state newspaper as saying.
""The objective now is to prevent the economy shifting from fast growth to overheating,"" Zhang said.
China also last month posted a trade surplus of 24.4 billion dollars, the second largest ever.
China has already tried a wide range of measures to control the economy, which expanded at 11.9 percent in the second quarter and 11.5 percent during the first half.
Interest rates had already been raised three times this year, most recently on July 21.
The bank reserve ratio -- the amount of money banks must hold in reserve -- has also been increased six times to stem liquidity.
In addition, the government has placed various curbs on exports, and allowed the yuan to appreciate, albeit at a much slower pace than the United States and China's other international trading partners had wanted